As instability in construction material prices and supply persists due to the worsening situation in the Middle East, the Ministry of Land, Infrastructure and Transport established measures to minimize disruptions in the supply of materials and supplies. It plans to resolve supply risk factors through demand management, such as adjusting the timing of orders for non-urgent projects. To reduce market confusion driven by anxiety, it will also share supply chain information with the private sector.
The Ministry of Land, Infrastructure and Transport (MOLIT) on the 23rd announced a review of trends and response plans for construction material prices and supply at the task force (TF) of ministers for special management of consumer prices.
The Ministry of Land, Infrastructure and Transport (MOLIT) has operated an emergency economy TF since the 3rd and is managing the supply of major items as supply instability spread amid signs of rising construction material prices due to the Middle East war. According to special inspections by regional land management offices, no construction sites across Korea have been entirely shut down, but there are some cases of partial work stoppages due to shortages of insulation, waterproofing materials, sealant, and asphalt concrete. In such cases, the impact on overall schedules is being minimized by prioritizing other processes.
However, anxiety persists that material supply will still become difficult in May. Competition to secure volumes in advance amid rising raw material prices and reduced production incentives among intermediate goods manufacturers are acting as key sources of supply instability.
Looking at current conditions by major material, asphalt concrete has seen a 20%–30% price increase as supply declined due to reduced feedstock. For ready-mix concrete admixtures, there were temporary supply disruptions early in the war, but anxiety has somewhat eased as domestic feedstock supply continued. However, prices have risen by up to 30%. Inventory of insulation materials is at about 50%, and prices have increased by up to 40%.
Adhesives are being produced on a limited basis, with prices up 30%–50%. There are no problems with feedstock supply for sealants, and prices of some products have risen by about 10%. Rebar, aggregate, and cement, which have large input volumes and significant impact on construction costs, have not experienced supply disruptions due to the Middle East situation, but rebar unit prices have risen by about 8%.
To quell supply instability, the Ministry of Land, Infrastructure and Transport (MOLIT) will resolve supply risk factors through proactive demand management measures such as adjusting order timing for non-urgent projects and prioritizing deliveries for urgent projects. In consultation with local governments and the Public Procurement Service, it will focus first on sites directly tied to public safety, livelihoods, and housing supply, such as urgently needed road maintenance ahead of the rainy season and apartment sites nearing move-in.
In particular, the government will hold a weekly briefing with the results of its monitoring to share supply chain information with the private sector and minimize market confusion. It will actively respond to media reports and fake news that fuel market anxiety, and upon receiving reports of collusion or hoarding, it will take immediate action with relevant ministries.
The Ministry of Land, Infrastructure and Transport (MOLIT) plans to identify fundamental alternatives to stabilize raw material prices. For items with a low share of construction costs but experiencing supply disruptions because unit prices have not been reflected, it will resolve the disruptions by swiftly reflecting unit prices in public works.
In the short term, to reduce disruptions in the supply of materials and supplies such as basic petrochemical feedstocks including ethylene, propylene, and butadiene in the construction materials sector, it will actively consult with industry and relevant ministries on simplifying import procedures and easing import unit prices. In the mid to long term, it is also reviewing measures such as support programs to diversify construction material supply chains.
In addition, the Ministry of Land, Infrastructure and Transport (MOLIT) will continue to pursue contract and financial support related to project timelines and construction costs arising from material supply disruptions.